According to Godrej Soaps chairman Adi Godrej, "Kotak Mahindra has been hired to look into the Godrej Foods business. Though we are not planning large investments in the foods category, we are running our foods business strongly to achieve growth. We are looking at restructuring steps that will improve the business. We are going to apply our minds and then look at all options." The company is expected to announce restructuring plans a year down the line. Kotak Mahindra Capital has also advised Godrej Soaps on its equity dilution plans in Godrej Sara Lee.

Over the last two years, Godrej Soaps has been undergoing restructuring of its businesses. The company recently announced the scheme of demerger to lay better focus on consumer products, which has a huge growth potential.

Godrej Foods manufactures edible oils under brands like Godrej Sunflower and Cooklite. It also makes the Jumpin range of fruit drinks. The company terminated its distribution arrangement with Pillsbury with effect from October 31, 2000, and is now distributing products on its own.

Earlier, since the company was reeling under huge debt, Godrej Foods had sold off its 29 per cent stake in Godrej Pillsbury to Godrej & Boyce for a consideration of Rs 31.13 crore. This enabled the company to overcome part of its debts.

The company had reduced the volumes of its trading activity, as also its branded edible oil products in order to reduce business risks. The resultant under recovery of fixed expenses led to a net loss for the company.

During the year 1999-2000, however, Godrej Foods had reported a net profit of Rs 1.23 crore for 1999-2000, as against a loss of Rs 10.81 crore in the previous year. Sales during the year were lower at Rs 379.81 crore as compared to Rs 451.32 crore last year.